School Levy and Compensation Reform

Click the chart to get a cool interactive version on the Seattle Times website.

Two recent articles in the Seattle Times point out one of the remaining key elements of resolving the McCleary “problem”, and it’s a BIG element. Most estimates have the size of the problem at about $3,000,000,000 to $3,500,000,000 ($3 – $3.5 billion) a biennium.

State in ‘weird place’ trying to alter reliance on school levies. This article talks about the politics involved, but doesn’t bring up all the weirdness with school funding formulas, in particular “levy equalization” paid to well over 200 districts (of 295) because their property values are lower than the core central Puget Sound districts. It also doesn’t address the “small school factor” that results in some very small school districts getting $50,000 per student.

I wrote a long piece on this issue last month. We have to make significant progress on the problem to comply with the supreme court. There are two endpoints of the discussion at this point:

Bruce Dammeier (R-Puyallup) introduced a bill (SB 6109) that does many, many things. Too many things. I have many complaints about it, but it is a serious piece of work.

Defines a new compensation model for teachers and shifts all teachers to it. The model makes changes in teacher compensation that will have winners and losers. It’s hard to pass a bill that results in some teachers losing salary.

Creates a regional compensation adjustment based on metropolitan statistical areas. These are very large and poorly shaped to respond to our economy. It’s not a crazy choice, but it’s one where I prefer we do something different. There is much disagreement on the need for this, with rural districts concerned that they will have a harder time hiring teachers. As you can see from the chart above, the pay is already significantly different.

Limits the amount of money districts can spend on anything related to earning graduation credits to the money from the state. This would prevent districts like Bellevue from offering a 7-period day, or districts from using levy money to fund summer school. I’d have a hard time supporting this provision.

Shifts all school employees to a state-run healthcare system and removes it as a subject of bargaining. I think we could save some money and provide better healthcare for school employees overall with this approach, but there are many, many issues to be worked out so that there are not big losers in how its implemented.

Repeals I-732 (teacher COLAs) and replaces it with a different (lesser) inflation factor.

Makes significant changes to how school levy limits are calculated that would have the impact of allowing Bellevue and Seattle to raise gobs of money above what they’re doing now, but not spend it on anything academic. I have huge problems with how he does this specific change.

Reps. Pat Sullivan, Kristine Lytton, Reuven Carlyle and I introduced HB 2239 that is the complete opposite end of the spectrum. It sets up a series of deadlines for the legislature to work out all these issues. The deadlines result in changes (perhaps identical to the ones Bruce envisions, but I doubt it) by the 2018-19 school year.

Both bills wind up with the state paying ALL of a teacher’s salary, instead of local taxpayers picking up the tab for large chunks of it. There is a lot of concern in the Legislature that some districts wind up paying more of the cost of this than others, which is true. The proposals to pay for it include:

Revenue-neutral (mostly) levy swap, raising the state property tax and lowering local property taxes by similar amounts. This tends to raise taxes in urban (wealthier) areas and lower them in rural (poorer) areas.

Capital gains (Senate Democratic proposal) has an even more exaggerated shift with increases in urban areas and decreases in rural areas. This could be mostly revenue-neutral as well.

Carbon Tax (an option in HB 2239) would have some kind of shift, but it’s hard to be specific about it without a lot more research. Also could be revenue-neutral.

If we used sales tax to pay for it, King County would pay half the cost, but get only one third the value – we have half the state’s economy and only a third of the population. This isn’t crazy – in a state with the most regressive tax system in the nation any tax move we do should be in the direction of greater fairness.

My guess is that in order to solve this problem we have to solve all of the other problems at the same time. Absent new revenue to pay for the additions to K-12 (all-day kindergarten, lower class sizes in K-3, etc.) it will be hard to convince legislators and voters in King County that they should pay for tax cuts in more rural parts of the state.

In my last post I said I didn’t know what the next step was. I’ve come to a conclusion and will be running a series of meetings to explore all these questions in detail, in public. Private meetings to work out proposals are very difficult, as you never have the full spectrum of interests in the room. If you do come to an agreement (which has not happened in the last three years we’ve been working on the problem) you still have to convince everyone else that your solution is rational. This will not be a quick process, but while we are in Olympia for special session we have time and can perhaps shorten the 2-year schedule envisioned in HB 2239.

The final bill we adopt this session, and we will need to adopt one, will be somewhere between the two.

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About the Author

I am the Director of the Department of Early Learning for Washington State. I formerly represented the 48th Legislative District in the State House of Representatives, chairing the Appropriations committee and spent many a year at Microsoft.

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Secretary, Washington State Department of Children, Youth, and Families. Formerly Director, WA State Dept. of Early Learning, State Representative for the 48th legislative district and a long-ago Microsoft exec.